ITO 2(3)(3), MUMBAI V. TRANSTEC OVERSEAS P.LTD, MUMBAI

ITA 5308/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7335 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim; Deemed export; Revised return
• Section: 143(3); 10AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5308 / MUM/ 20 1 5 ( / ASSESSMENT YEAR: 2009 - 10 ) THE INCOME TAX OFFICER 2(3)(3), ROOM NO. 555, AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI - 400020 / VS. M/S. TRANSTEC OVERSEAS PVT. LTD. 70, PODAR CHAMBERS, 3 RD FLOOR, S.A. BRELVI MARG, FORT, MUMBAI - 400001 ./ ./ PAN/GIR NO. : AACCP 2309 N ( / APPELLANT ) .. ( / RESPON DENT ) / DATE OF HEARING : 11 .0 5 .201 8 / DATE OF PRONOUNCEMENT : 11. 05 . 2018 / O R D E R PER AM ARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 27 .0 8 .20 15 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 6 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE AY. 2009 - 10 IN WHICH THE PENALTY LEVIED BY TH E AO HAS BEEN ORDER TO BE DELETED . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMER ATED BELOW: REVENUE BY: S HRI ASHISH KUMAR (DR) ASSESSEE BY : SHRI VIJAY MEHTA ITA. NO. 5308/ M/20 1 5 A.Y. 2009 - 10 2 2. THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD CONCEALED HIS INCOME AND HAD FILED INACCURATE PARTICULARS OF HIS INCOME AS PER THE PROVISIONS OF SECTION 271(1)(C) READ WITH EXPLANATION 1 THERETO OF THE I.T. ACT,1961 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE SCRUTINY ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 22.12.2011 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.1,03,46,350/ - AGAINST THE DECLARED IN COME TO THE TUNE OF RS.3,34,877/ - . THE ASSESSEE COMPANY HAS CLAIMED THE DEDUCTION U/S 10AA OF THE I.T. ACT, 1961 OF RS.69,31,997/ - IN ORIGINAL RETURN OF INCOME WHICH WAS SUBSEQUENTLY ENHANCED TO THE TUNE OF RS. 1,03,20,914/ - IN THE REVISED RETURN OF INCOME. THE ENHANCED CLAIM OF DEDUCTION WAS RAISED ON ACCOUNT OF THE AMENDMENT INTRODUCED U/S 10AA OF THE ACT BY FINANCE ACT, 2010 W.E.F. 01.04.201 6. THE ASSESSING OFFICER NOTICE D THAT THE SALE OF THE ASSESSEE WAS OF RS. 40 , 108 , 434 / - AND COST OF MATERIAL WAS TO TH E TUNE OF RS.25,342,939/ - IN ITS SEZ DIVISION SHOWING THE NET PROFIT OF RS.10,392,389/ - . THE AO NOTICE D THAT THE ASSESSEE HAS SHOWED THE SALE RATIO @ 25.9% IN ITS SEZ UNIT AND THE PROFIT TO SALE RATIO @ 1.42% IN MUMBAI DIVISION. AFTER THE VERIFICATION OF TH E DETAILS , THE AO RESTRICTED DEDUCTION U/S 10AA OF THE ACT TO THE TUNE OF RS. 3,09,440/ - AND DISALLOWED THE BALANCE AMOUNT OF RS.10,011,474/ - . THE PENALTY WAS INITIATED U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. THEREAFTER, NOTICE WAS GIVEN AND PEN ALTY TO THE TUNE OF RS.33,25,561/ - WAS LEVIED BY VIRTUE OF ORDER DATED 26.03.2014. FEELING AGGRIEVED, THE ITA. NO. 5308/ M/20 1 5 A.Y. 2009 - 10 3 ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THERE IS A DELAY OF 15 DAYS IN FILING THE APPEAL. SINCE, THE PERIOD OF THE DELAY IS NO T SO LONG, THEREFORE, WE CONDONED THE DELAY IN THE INTEREST OF JUS TICE BECAUSE THE CASE IS REQUIRED TO BE DECIDED ON MERITS. THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE ASSESSEE HAS RAISED THE WRONG CLAIMED IN VIEW OF THE PROVISION U/S 10AA OF THE ACT WHICH WAS DECLINED BY THE AO, THEREFORE, THE AO HAS R IGHTLY LEVIED THE PENALTY IN ACCORDANCE WITH LAW BUT THE CIT(A) HAS WRONGLY DELETED THE SAME. THEREFORE, THE ORDER OF THE CIT(A) IN THIS REGARD IS LIABLE TO BE SET ASIDE IN VIEW OF THE LAW SETTLED IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS PVT. LTD. 233 C TR 465 (DEL) . ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTION AND STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE GOING FURTHER , WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) O N RECORD: - 7 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE AR. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER U/S 143(3) ORDER OF THE LD. CIT(A) AND THE PENALTY ORDER U/S 271(1)(C) PASSED BY THE AO. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY THE AO AND THE LD. AR. THE AO HAS LEVIED PENALTY ON THE GROUND THAT ASSESSEE HAD CLAIMED ENHANCED DEDUCTION U/S 10AA AMOUNTING TO RS.1,03,20,914/ - AS AGAINST THE DEDUCTION OF ITA. NO. 5308/ M/20 1 5 A.Y. 2009 - 10 4 U/S 10AA AMOUNTING TO RS.1,03,20,914/ - AS AGAINST TH E DEDUCTION OF RS.69,31,997/ - CLAIMED IN THE ORIGINAL RETURN. HE CONCLUDED THAT WITH AN INTENTION TO REDUCE ITS PROFITS, THE ASSESSEE HAS ENHANCED THE DEDUCTION BY INCLUDING THE LOCAL SALES AS EXPORT SALES AND TRIED TO JUSTIFY THE SAME BY RELYING ON THE AM ENDMENT IN THE RULE. HOWEVER, THE BASIC CHARACTER FOR AVAILING THE DEDUCTION IS EXPORT OUT OF INDIA WHICH IS NOT THE CASE OF THE ASSESSEE. SINCE THE ASSESSEE HAD NOT EXPORTED BUT CLAIMED THE ENHANCED DEDUCTION WITH AN INTENTION ONLY TO EDUCE THE PROFITS AN D TAXABLE INCOME, THE PROVISIONS OF SECTION 271(1)(C) ARE CLEARLY APPLICABLE. HE RELIED ON THE DECISION IN THE CASE OF CIT VS. RAKESH SURI (2010) 233 CTR (ALL) 184. CIT VS. ZOOM COMMUNICATION P. LTD. (233 CTR 465 (DEL), INDIAN SEAFOODS 105 ITR 708 AND CIT VS. HCIL KALINDEE APRSSPL. 37 TAXMANN. 347 (DELHI). ON THE OTHER HAND, THE LD. AR HAS ARGUED THAT REJECTION OF A LEGAL CLAIM FOR DEDUCTION U/S 10AA DOES NOT AMOUNT TO CONCEALMENT. HE ALSO STATED THAT DEEMED EXPORT WERE HELD TO BE ALLOWABLE IN SOME CASES BY THE HONBLE ITAT. HENCE THE PRESENT CASE IS A DEBATABLE ONE. IT WAS FURTHER STATED THAT ENHANCED CLAIM WAS MADE ON THE BASIS OF CA CERTIFICATE AND DUE TO THE AMENDMENT IN THE RULES. HE STATED THAT ALL FACTS MATERIAL TO COMPUTATION OF INCOME WAS DISCLOSED IN THE RETURN OF INCOME AND FINANCIAL STATEMENTS. THE LD. AR ALSO STATED THAT FACTS OF THE APPELLANT ARE DIFFERENT FROM THE DECISIONS RELIED ON BY THE AO. HE HAS RELIED ON A NUMBER OF DECISIONS WHICH HAVE BEEN DETAILED IN PARA 6 ABOVE. 5 . ON APPRAI SA L OF THE ABOVE MENTIONED ORDER , WE NOTICED THAT THE ASSESSEE RAISED THE CLAIM U/S 10AA OF THE ACT ON THE ADVICE OF ITS CA . THE ASSESSEE RAISED THE CLAIM THE DEDUCTION OF RS. 69,31,997/ - U/S 10AA OF THE ACT IN THE ORIGINAL RETURN OF THE INCOME. THE SAID RETURN W AS SUPPORTED BY AUDITORS REPORT IN FORM NO. 56F . I N BOTH THE RETURN S ASSESSEE HAS D ISCLOSED THE MATERIAL FACTS BEFORE THE AUTHORITY. THERE WAS NO CONCEALMENT OF INCOME NOR ASSESSEE FURNISHED THE INACCURATE PARTICULAR OF INCOME. UNDOUBTEDLY, THE CLAIM OF T HE DEDUCTION U/S 10AA WAS NOT ACCEPTED AND THE SUITABLE DISALLOWANCE BY ITSELF DOES ITA. NO. 5308/ M/20 1 5 A.Y. 2009 - 10 5 NOT ATTRACT PENALTY IN VIEW OF THE PROVISION OF 271(1)C OF THE ACT. . IN THIS REGARD WE RELIED UPON THE DECISION IN THE CASE OF RELIANCE PETROPRODUCTS 321 ITR AND IN THE CA SE OF UNION OF INDIA VS. DHARMENDRA TEXTILES (SUPRA). HOWEVER WHILE PASSING THE ORDER , THE CIT( A) HAS ALSO RELIED UPON THE NUMBERS OF CASES DISCUSSED ABOVE IN HIS ORDER WHICH HAS BEEN PASSED BY THE AUTHORITY ON SIMILAR LI NES. SO FAR AS THE CASE I.E CIT VS. ZOOM COMMUNICATIONS PVT. LTD. 233 CTR 465 (DEL). RELIED BY THE REVENUE IS CONCERN ED, THE SAME IS NOT IN CONNECTION WITH DISALLOWING OF THE CLAIM U/S 10AA OF THE ACT ETC . I N THE SAID CASE, A SUM OF RS.1,2 1 , 49,861/ - WAS DEBITED UNDER THE HEAD OF EQUIPMENT RETURN WHICH WAS NOT ADDED BACK IN COMPUTATION OF INCOME. ACCORDINGLY, THE FACTUAL POSITION IS DIFFERENT. THEREFORE, THE LAW RELIED BY THE LD. REPRESENTATIVE OF THE REVENUE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. T HE CIT(A) HAS PASSED THE ORDER ON THE BASIS OF THE FACTUAL POSITION OF THE CASE AS WELL AS BY RELYING UPON THE RELEVANT LAW DISCUSSED ABOVE. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE IN TERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE DISMISSED THE APPEAL OF THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HERE BY ORDERED TO BE DISMISSED . ITA. NO. 5308/ M/20 1 5 A.Y. 2009 - 10 6 ORDER PRONOUNCED IN THE OPEN COURT ON 11. 05 . 2018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 11.0 5 . 2018 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI